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MURRAY HILL, N.J.--(BUSINESS WIRE)--Jan. 20, 1998--
-- Net Income increased 31 percent; tops $1 billion for
first time
-- Revenues from continuing operations increased 16 percent
Lucent Technologies today reported that net income increased 31
percent to a record $1.124 billion or $1.72 a share(a) for the first
fiscal quarter ended December 31, 1997, excluding a one-time charge
associated with the December acquisition of Livingston Enterprises,
Inc., and a one-time gain associated with the October sale of the
company's Advanced Technology Systems (ATS) business. This compares
to net income of $859 million and earnings per share of $1.35 in the
year-ago quarter.
The company's revenues for the first quarter of its 1998 fiscal
year were $8.724 billion, an increase of 16 percent on the company's
continuing operations(b) and an increase of 10 percent on overall
revenue in the year-ago quarter, when total revenues were $7.938
billion.
Including a one-time, after-tax charge of $427 million associated
with the Livingston acquisition and an after-tax gain of $95 million
associated with the company's sale of its Advanced Technology Systems
business, net income for the first quarter was $792 million or $1.21
per share(a).
"This was another record quarter for Lucent, reflecting solid
operational growth and successful efforts to manage costs," said
Richard McGinn, Lucent Technologies CEO and President. "During this
quarter, we restructured our business to take advantage of the
hottest growth opportunities. For example, in the high-growth
data-networking arena, we acquired Livingston Enterprises and began
an acquisition of Prominet Corporation.
(a) All earnings per share reported in this release are Diluted
EPS figures.
(b) This includes revenues for Lucent's Systems for Network
Operators, Microelectronic Products and Business Communications
Systems businesses (including the Octel Messaging division). It
excludes revenues from the company's former Consumer Products
business, which became part of a new business jointly owned by Lucent
and Philips Electronics N.V.; and from Lucent's Advanced Technology
Systems and Custom Manufacturing Services businesses, which the
company sold. For the calendar year, continuing operations also
excludes revenue from the company's Paradyne business, which was
sold.
"Our sales to network service providers were particularly strong
this quarter," McGinn added. "Revenues grew more than 18 percent
over last year's record quarter, led by robust sales of switching and
wireless systems and software."
Within Lucent Technologies, revenues for Systems for Network
Operators increased 18.2 percent to $5.943 billion, revenues for
Microelectronic Products increased 15.5 percent to $775 million, and
revenues for Business Communications Systems increased 11.4 percent
to $1.93 billion, compared to the year-ago quarter.
Comparing calendar year 1997 to 1996, Lucent's revenues for
continuing operations(b) increased 19 percent. For the same period,
total revenues increased 14 percent to $27.146 billion.
Review of Operations
SYSTEMS FOR NETWORK OPERATORS
Revenues increased 18.2 percent over the year-ago quarter to
$5.943 billion, led by sales of switching and wireless systems,
software, transport and access systems, and professional services.
This record-setting quarter marked the highest software and wireless
sales in Lucent's history.
Revenues were led by sales to competitive local exchange
carriers, RBOCs (Regional Bell Operating Companies), wireless service
providers and long-distance carriers. The continued demand for
second lines in businesses and residences - for uses such as Internet
services and data traffic - also contributed to the group's strong
revenues.
Comparing calendar year 1997 to 1996, revenues increased 21
percent to $16.531 billion.
MICROELECTRONIC PRODUCTS
Revenues increased 15.5 percent over the year-ago quarter to $775
million, driven by sales of customized chips for computing and
communications, including components for wireless telephones, local
area networks, data networking and high-end computer workstations.
Increased revenues from power systems, optoelectronic components and
the licensing of intellectual property also contributed significantly
to the group's revenues. Revenues were driven by sales to original
equipment manufacturers.
Comparing calendar year 1997 to 1996, revenues increased 17.8
percent to $2.859 billion.
BUSINESS COMMUNICATIONS SYSTEMS
Revenues increased 11.4 percent to $1.93 billion compared to the
year-ago quarter. The group's results were primarily driven by sales
of messaging systems -- including systems provided by the recently
acquired Octel Messaging Division -- to large and small businesses,
sales of services, and sales of SYSTIMAX(R) networking systems.
Comparing calendar year 1997 to 1996, revenues increased 15.6
percent to $6.608 billion.
COSTS AND EXPENSES
As a percentage of revenue, gross margin for the quarter was
48.2 percent, compared to 45.9 percent in the year-ago quarter,
driven by record software sales, strong intellectual property
revenues and improved management of costs.
Selling, general and administrative expenses (SG&A) decreased to
17.8 percent of revenues in the quarter, compared with 18.4 percent
in the year-ago period.
Research and development (R&D) expenses, excluding the Livingston
charge, increased 16.3 percent over the year-ago quarter due to
investments in high growth areas such as wireless, data networking,
optical networking and microelectronics. As a percentage of
revenues, quarterly R&D spending, excluding the Livingston charge,
increased from 9 percent in the year-ago quarter to 9.5 percent.
Excluding one-time events, net income for the quarter was driven
by revenue growth, higher gross margins, lower SG&A as a percentage
of revenue and by a decrease in the company's effective tax rate to
36 percent, compared to 38.6 percent in the year-ago quarter.
Lucent Technologies, headquartered in Murray Hill, N.J., designs,
builds and delivers a wide range of public and private networks,
communications systems and software, data networking systems,
business telephone systems and microelectronic components. Bell Labs
is the research and development arm for the company. For more
information on Lucent Technologies, visit the company's web site at
lucent.com.
*T
First Quarter Income Statement (Unaudited; Millions of
Dollars, except per share amounts)
For the Three Months Ended
12/31/97 12/31/97(a) 12/31/96 Change(b)
Revenues 8,724 8,724 7,938 9.9%
Costs 4,519 4,519 4,296 5.2%
Gross Margin 4,205 4,205 3,642 15.5%
Selling, General and 1,555 1,555 1,459 6.6%
Administrative
Research and Development 1,256 829 713 16.3%
Total Operating Expenses 2,811 2,384 2,172 9.8%
Operating Income 1,394 1,821 1,470 23.9%
Other Income, net 163 14 9 55.6%
Interest expense 79 79 79 --
Income before income taxes 1,478 1,756 1,400 25.4%
Income tax expense 686 632 541 16.8%
Net Income 792 1,124 859 30.8%
Earnings per share - Basic (c) 1.23 1.75 1.35 29.6%
Earnings per share - Diluted (c) 1.21 1.72 1.35 27.4%
Effective tax rate (%) 46.4% 36.0% 38.6% (2.6)%
(a) 1997 excludes a one-time, after-tax charge of $427 million
for purchased in-process research and development related to the
Company's acquisition of Livingston Enterprises, Inc. and a one-
time, after-tax gain of $95 million on the sale of Advanced
Technology Systems (ATS) business in October 1997.
(b) Change between the three-month period ending 12/31/97,
excluding a one-time charge related to the Company's acquisition of
Livingston Enterprises, Inc. and the one-time gain on sale of ATS,
and the corresponding 1996 period.
(c) The Income Statement presentation above has been changed to
comply with the new accounting standard for Earnings Per Share
("EPS"). The new standard requires dual presentation of Basic and
Diluted earnings per share. The Diluted EPS is calculated under a
similar method as previously reported earnings per share. For
Lucent, there was no change in EPS as reported in the comparable
quarter under the previous accounting requirements. |
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